High-dose glucocorticoid (GC) therapy is widely used to treat multiple sclerosis (MS), but the underlying mechanisms remain debatable. In this study, we investigated the impact of GC administration on experimental autoimmune encephalomyelitis using different GC receptor (GR)-deficient mutants. Heterozygous GR knockout mice were less sensitive to dexamethasone therapy, indicating that the expression level of the receptor determines therapeutic efficacy. Mice reconstituted with homozygous GR knockout fetal liver cells showed an earlier onset of the disease and were largely refractory to GC treatment, indicating that the GR in hematopoietic cells is essential for the beneficial effects of endogenous GCs and dexamethasone. Using cell-type specific GR-deficient mice, we could demonstrate that GCs mainly act on T cells, while modulation of macrophage function was largely dispensable in this context. The therapeutic effects were achieved through induction of apoptosis and down-regulation of cell adhesion molecules in peripheral T H 17 and bystander T cells, while similar effects were not observed within the spinal cord. In addition, dexamethasone inhibited T cell migration into the CNS, confirming that peripheral but not CNS-residing T lymphocytes are the essential targets of GCs. Collectively, our findings reveal a highly selective mechanism of GC action in experimental autoimmune encephalomyelitis and presumably multiple sclerosis.